Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

I know the member for Bendigo is a new member here but I think a bit of history lesson is due in relation to the previous government's wonderful dismissal of small business and their importance to our economy. The member for Bendigo touched on the instant asset write-off that Labor introduced; that was funded by a tax that raised no money. But that is not unusual for the former government. She touched on increasing the tax-free threshold to $18,000, as though that was some magnificent achievement. In reality it was compensation for the increase in the carbon tax. I would like to remind the member for Bendigo that it is actually this government now that has repealed the carbon tax, but we left the increased tax-free threshold in place. So individuals and small businesses that are not structured as companies are far better off under this government as a result of the fact that we got rid of the carbon tax.

In regard to Defence procurement, I have a couple of small businesses in my electorate that supply services to Defence, and I can tell you from discussions we had when the previous government was in power, when they removed $16 billion from Defence, those businesses suffered at the hands of that previous government. So to be lectured by the member for Bendigo about what the previous government did or did not do for small business is a little bit rich.

I have great pleasure to rise today to support the Tax Laws Amendment (Small Business Measures No. 1) Bill 2015 and Tax Laws Amendment (Small Business Measures No. 2) Bill 2015. The 2015 federal budget's $5.5 billion Growing Jobs and Small Business package is the biggest economic recognition of this sector in Australia's history. Introducing policy initiatives to grow Australia's small business sector is imperative in boosting confidence in our nation's economy.

Small business makes up 96 per cent of all Australia's businesses, employs more than 4.5 million people and produces over $330 billion of our nation's economic output per year. In 2013-14 alone, Australians started over 280,000 small businesses. What a transition, compared to six years of Labor where around 519,000 jobs were lost in small business—equating to around 1544 job losses each week.

When the Howard government left office, Australia ranked 68th on the global competitiveness index when it came to government regulation. After six years of Labor and six different small business ministers, our nation was wrapped up in red tape and slid down the ladder to 128th.

The hardworking women and men of Australian small businesses are the engine room of our economy, and it is our belief as a government that they deserve a better, fairer and more competitive system that supports—not hinders—small business growth.

Small business owners are the 'have a go' Australians who follow their dreams, take a risk and dive in to the world of business. They are the people who provide services; train and employ people; and contribute to the economic growth of their local communities. There is no doubt small business is at the forefront of Australia's jobs and growth, and the coalition is delivering for small businesses now and into the future with this legislation.

The first small business measure is about the reduction of small business company tax rate, a measure that will boost cash flow, profits and productivity of Australian small businesses, and give them the opportunity to grow their business, become more competitive in the market, take on new employees and retain more earnings for reinvestment to provide the capital that they need to grow their businesses. Providing the ability for businesses to reinvest leads to existing output being produced at a lower cost, new and improved ways of doing business, and overall improving our nation's productivity.

We want to see higher investment leading to higher employment and wages over time, and the measures undertaken in the Growing Jobs in Small Business package is the first step in achieving this. Reducing the company tax rates for incorporated small businesses is at the heart of this Growing Jobs and Small Business package. This will be achieved by reducing the company tax rate by 1.5 per cent to 28½ per cent for companies with aggregated turnover of less than $2 million, from the income year commencing 1 July 2015. I am proud to say that this is the lowest tax rate for small business since 1967. This proposal will create a two-tier company tax system whereby companies with an aggregated turnover of below $2 million will be subject to the lower rate and those above $2 million will be subject to the current 30c tax rate.

Some 780,000 small businesses in Australia will benefit from the 1.5 per cent tax cuts. The flow-on effects will be instrumental in boosting our economy. Along with other Growing Jobs and Small Business package measures, reducing the company tax rate will assist small business to grow and compete more effectively with larger businesses and will create more jobs for more Australians. More people in work means fewer people on welfare and more money for individuals and families, resulting in a stronger Australian economy.

The second small business measure will do three things. It will provide accelerated depreciation arrangements to small business as well as primary producers, will encourage the prosperity of small businesses and will improve the resilience of Australia's farming community. Helping more small businesses become profitable and sustainable will put small business owners in the best position possible to hire new employees and provide more jobs, particularly to Australia's younger people and older workers. I will use the example of one of our local businesses shortly.

This bill will amend the small business simplified depreciation rules to increase the threshold for immediate deductibility of assets, from $1,000 to $20,000, and an unlimited number of assets provided they are each less than $20,000 in value. This is a significant increase in the threshold and will create significant gain for small businesses, with around 96 per cent of all Australian businesses able to access the accelerated depreciation and to potentially benefit from this increase.

I was speaking to the owners at one of my local businesses, CG's Coffee & Grub at Bethania, who have been open about six months. They said that there was not a single piece of equipment in that shop that was worth more than $20,000. So under these measures they will now be able to write-off that whole investment of $70,000 or $80,000, which they used to set up that new business six months ago, in this financial year.

Small businesses are complex in nature. These budget measures strongly reflect our government's understanding of this. Small business is at the very heart of rural and regional Australia. With this in mind, the second thing this bill will do is amend the tax law to provide simplified accelerated depreciation rules for all farmers.

I am very proud to have seen these two important measures introduced to encourage a more prosperous and economically sound business climate in Australia. As I have touched on many times, our small business sector is vital and important to where we want our economy to grow, develop and prosper because, more often than not, it is where the innovation and creativity is reflected. Many of the large businesses that we see today not only in Australia but globally were once small businesses that were innovative and leading the pack. Through that innovation they have grown to now be major global businesses that, in some cases, employ thousands, if not tens of thousands, of people.

Along with the Growing Jobs and Small Business package measures, I think we need to reflect on some of the other things that we are doing in the broader context of employment. The member for Bendigo touched on Tools For Your Trade loans. I would like to remind the member for Bendigo that we introduced trade support loans for apprentices, to the value of $20,000. If they complete their apprenticeship, they get support in the form of a discount on that for having completed their apprenticeship. There are many other things that we are doing in the employment arena to support small businesses both in this budget and in the previous budget, because we recognise that if we can get people into the workforce it is better for all concerned. It is interesting to note the comments from the Australian Chamber of Commerce and Industry CEO Kate Carnell. She said:

… the government is looking after those 1.7 million unincorporated small businesses—

with these measures—

including tradies, sole operators and partnerships …

She made the point:

Making it easier for small businesses to claim tax deductions for their expenses will make it easier for small businesses to invest.

Another item in this budget to assist many small business producers, particularly in our rural areas, allows primary producers to receive accelerated depreciation on a wide range of matters. Australia's primary producers have been dealing with tough conditions both naturally and economically. These budget measures will improve the resilience of our primary producers who face drought by assisting with cash flow and reducing red tape by removing the need for primary producers to track expenditure over time.

The three main changes to the depreciation rules for primary producers will see all primary producers being able to immediately deduct capital expenditure on fencing. Currently, the effective life of fences is 30 years. I think it was the Minister for Agriculture who, in reflecting on his previous life as an accountant, said, to paraphrase, 'I never saw much repair and maintenance occurring on the fences. They were always fixed.' Secondly, primary producers will be able to immediately deduct expenditure on water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers, windmills and water facilities that are currently depreciated over three years. Thirdly, primary producers will be able to depreciate, over three years, all capital expenditure in forage storage assets such as silos and tanks. Currently, the effective life of fodder storage assets can be up to 50 years. The capacity to write these things off, and also the fact that you do not have to keep all of the associated paperwork for that length of time, reduces the paperwork burden on many small businesses. It will also reduce the cost of getting their accounting and book work done every year, so that is another cost saving to small business.

Our government is focused on strengthening the competitiveness of the whole small business sector in agriculture and manufacturing. The member for Bendigo touched on GPs but neglected to mention pharmacies. We have put an extra $2.8 billion back into community pharmacies through the Sixth Community Pharmacy Agreement. The Australian economy is currently facing some structural adjustments as the mining boom wanes, and we see that effect flowing through the economy. Small businesses are typically more vulnerable than large businesses to shock and changes in economic conditions. So during this period of economic transition it is important that the government's policy settings support small business growth and innovation. We have also done this in the employee share ownership space. We have removed some of the onerous restrictions on employee share ownership that the previous Labor government introduced in 2009. We have made it much easier for businesses to start issuing shares to employees to balance the remuneration mix—start-up businesses might not initially be able to pay higher rates of wages. Helping small businesses become profitable, sustainable and competitive is in the long-term national interest.

I commend these bills to the House.

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